Question

How does the Total Profit (TP) curve behave at the break-even outputs OL and ON?

Options

• TP is always above the X-axis there

• TP cuts the X-axis at these outputs

• TP is maximum at OL

• TP is negative between OL and ON

Answer 1

TP cuts the X-axis at these outputs

Explanation:

At OL and ON, profit is zero, so the TP curve intersects (cuts) the X-axis at these points.